Dairy company, Fonterra, based in New Zealand have predicted strong milk prices for the coming 12 months, based on recent global demands.
The company predicted that milk prices will reach up to $6.57 per kg (€3.75 p/kg) of milk solids for 2017/18. This would mean a price of 28.5 cents(17.46 P/L €) per litre for all its suppliers. They said this forecast is based on current global demand for dairy, with a recent surge in dairy product purchases.
The company also announced that European and New Zealand markets are back on par, after a year of contradictions. Fonterra also predict that there will be a increase of between 1.9 cents per litre and 2.3 c/litre for suppliers with shares for the coming season.
The predictions were made by Fonterra in lieu with the posting of their 2016/17 financial results. They also confirmed $6.12/kg of MS as the final price for the 2016 milking season. This comes to just below 26 cents per litre of milk and after prices in New Zealand dropped to as low as 16 cents per litre in 2015.
Agribusiness analysts, Informa, also predicted that milk production in New Zealand will increase by as much as 4.5% over the next 12 months. They predict that global prices will rise by as much as 30% over the next year.
Milk demand is also expected to rise in China this year, due to the lapsing on the country’s one child policy. In 2016 alone there was almost 17 million new children born in China, an almost 3% increase on 2015 numbers. This means there will be a significantly increased global demand for dairy, milk formulas, and in turn will help prices.
Informa also predict that prices will face a little pressure before the year is out, as rising commodity prices hamper demand.
All of this predicted success is dependent on a lot of variables, though if these predictions are anything to go by, it could mean a very good year for the dairy industry.